REGULATIONS 45.

(1920 EDITION)

RELATING TO THE

INCOME TAX

AND

WAR PROFITS AND EXCESS PROFITS TAX

UNDER

TITLES II AND III OF THE REVENUE ACT OF 1918.

[40 U. S. Statutes at Large, 1057.]

Table of Contents__

Part I. Income Tax on Individuals (Sections 210–228).

II. Income Tax and War Profits and Excess Profits Tax on Cor-

porations:

Page.

4

19

A. Income Tax (Sections 230-241)

152

B. War Profits and Excess Profits Tax (Sections 300–337) –

183

III. Administrative Provisions (Sections 250–261)-

229

IV. Definitions and General Provisions (Sections 1-206; 1301-1408) -

257

Index

293

3

PART I.

INCOME TAX ON INDIVIDUALS.

[The section numbers refer to the statute and the article numbers to the regulations.]

24. Methods of accounting.

25. Accounting period ---

26. Change in accounting period__.

Section 213(a). Gross income defined: inclusions.

Article 31. What included in gross income----

32. Compensation for personal services_.

33. Compensation paid other than in cash_

34. Compensation paid in notes----

35. Gross income from business.

36. Long-term contracts

37. State contracts-‒‒‒.

38. Gross income of farmers_-

28

28

29

29

30

30

31

31

31

32

32

32

44. Sale of real estate involving deferred payments.

45. Sale of real estate on installment plan_-__-.

36

37

46. Deferred payment sales of real estate not on installment

Page.

Section 213(b). Gross income defined: exclusions__

Article 71. What excluded from gross income_

72. Proceeds of insurance_

73. Gifts and bequests---.

74. Interest upon State obligations---.

75. Dividends and interest from Federal land bank and

national farm loan association___.

42

43

43

44

44

44

76. Dividends from Federal reserve bank.

44

77. Interest upon United States obligations.

45

78. Liberty bond exemption under Second, Third, and Fourth

Liberty Bond Acts----

45

79. Liberty bond exemption under Supplement to Second

Liberty Bond Act-----

46

80. Liberty bond exemption after December 31, 1918---.

80(a). Summary of tax exemptions of Liberty bonds and

47

Victory notes

81. Liberty bond exemption in the case of trusts_

98

49

50

82. Liberty bond exemption in the case of partnerships and

personal-service corporations

83. Income of foreign governments.

84. Income of States___.

85. Compensation of State officers...

86. Compensation of soldiers and sailors___.

87. Income accruing prior to March 1, 1913_

88. Subtraction for redemption of trading stamps..

Section 213(c). Gross income defined: nonresident alien individual_.

Article 91. Gross income of nonresident alien individuals.

92. Income of nonresident alien individuals not subject to tax_

92(a). When the wages of a nonresident alien seaman are

derived from sources within the United States___.

93. Income of nonresident aliens from United States bonds__

Section 214(a) 1. Deductions allowed: business expenses___

Article 101. Business expenses.

102. Cost of materials_

56

Page.

Section 214(a) 4, 5, and 6. Deductions allowed: losses..

Article 141. Losses.

142. Voluntary removal of buildings.

143. Loss of useful value---.

144. Shrinkage in securities and stocks_.

145. Losses of farmers_-_.

Section 214(a) 7. Deductions allowed: bad debts_

Article 151. Bad debts-----.

152. Examples of bad debts-

153. Worthless mortgage debt..

154. Worthless securities

Section 214(a) 8. Deductions allowed: depreciation_

Article 161. Depreciation

63

64

64

65

65

66

66

66

67

67

68

68

68

169. Charging off depreciation___

170. Closing depreciation account__.

171. Depreciation in the case of farmers_

Section 214(a) 9. Deductions allowed: amortization

Article 181. Scope of provision for amortization_

182. Depreciation of amortized property--.

183. Property cost of which may be amortized_

184. Cost which may be amortized_---

185. Amortization period‒‒‒‒‒‒

186. Additional requirements for amortization__

187. Redetermination of amortization allowance.

188. Sale of amortized property----

71

72

72

72

73

73

73

73

74

75

189. Information to be furnished by the taxpayer-

Section 214(a) 10. Deductions allowed: depletion__‒‒‒

Article 201. Depletion of mines, oil and gas wells; depreciation of im-

provements____.

76

202. Capital recoverable through depletion deduction in the

case of an operating owner_--

77

203. Capital recoverable through depletion deductions in the

case of lessee____.

77

204. Capital recoverable through depletion in case of lessor__

205. Determination of cost of deposits______

78

79

206. Determination of fair market value of mineral property_

207. Revaluation of mineral deposits not allowed---

208. Determination of mineral contents of mine_--

209. Determination of quantity of oil in ground...

79

81

81

82

210. Computation of deduction for depletion of mineral de-

posits_____

82

211. Computation of allowance for depletion of gas wells----

212. Gas-well pressure records to be kept------

82

83

213. Computation of allowance where quantity of oil or gas

uncertain

84

Section 214(a) 10. Deductions allowed: depletion-Continued.

Article 214. Computation of depletion allowance for combined hold- Page.
ings of oil and gas wells_----

215. Depletion-Adjustments of accounts based on bonus or

advanced royalty

216. Depletion and depreciation accounts on books---

84

85

217. Statement to be attached to return when depletion or de-

preciation of mineral property is claimed___

218. Statement to be attached to return where depletion of

oil or gas claimed___.

219. Discovery of mines -

220. Oil and gas wells_-_-

220(a). Discovery-Proven tract or lease Property dispro-

223. Charges to capital and to expense in the case of oil and

gas wells

91

224. Depreciation in the case of mines---

92

225. Deprecation of improvements in the case of oil and

gas wells-.

226. Depletion and depreciation of oil and gas wells in years

before 1916_____

227. Depletion of timber---

94

228. Capital recoverable through depletion allowance in the

case of timber_____.

229. Computation of allowance for depletion of timber for

given year

230. Revaluation of timber not allowed____.

231. Charges to capital and to expenses in the case of timber...-

232. Depreciation of improvements in the case of timber----

233. Information to be furnished by taxpayer claiming deple-

tion of timber_____

234. Determination of fair market value of timber.

235. Determination of quantity of timber___.

236. Aggregating timber and land for purposes of valuation

and accounting--.

98

237. Timber depletion and depreciation accounts on books_

Section 214(a) 11. Deductions allowed: charitable contributions__
Article 251. Charitable contributions___.

Section 214(a) 12. Deductions allowed: loss in inventory-

Article 261. Losses in inventory and from rebates_

262. Loss from rebates

263. Loss in inventory.

264. Loss where goods have been sold_.

99

100

100

101

102

102

102

102

Section 214(b). Deductions allowed: nonresident alien individual_

105

105

106

106

292. Traveling expenses

106